An amendment to Cyprus VAT Law provides the new legislative framework for 5% Value Added Tax (VAT) rate on the acquisition and/or construction of a primary residence in Cyprus.
The new law provides that 5% VAT applies for:
- The first 130 sq.m. for a value up to €350.000
- Subject to the total value not exceeding €475.000 and total size not exceeding 190 sq.m.
The acquisition and/or construction of a new residence that exceeds the 190 sq.m. and/or €475.000 maximums will be subject to 19% VAT for the whole value.
The new legislative framework does not apply for buildings for which a planning permission has been obtained or an application for planning permission has been submitted until 31st of October 2023, and the relevant application for the 5% VAT rate has been submitted within 3 years from the date of the new law (i.e. by 15/06/2026).
Any residences meeting the transitional provisions will be eligible to apply for the 5% VAT reduced rate under the regime applicable up to 15/06/2023 (i.e. 5% for the first 200 sq.m. with no value or size maximums).